Coca-Cola Stalls Expansion at Varanasi Due to Protests, Delay in Approval

The company will explore options to relocate the new line within Uttar Pradesh after taking all regulatory approvals

Business Standard
August 26, 2014

New Delhi: Beverages major Coca-Cola has decided not to pursue its proposed expansion at its Mehdiganj plant near Varanasi for which it did not get regulatory clearances Central Ground Water Authority for since 2012.

Hindustan Coca-Cola Beverages Pvt Ltd, the bottling arm of Coca-Cola, has written to Alok Rajan, chief secretary, Government of Uttar Pradesh, stating: "due to inordinate delay in receiving of the no objection certificate, causing delay in expansion of capacity leading to financial losses, we have decided not to pursue the expansion at Varanasi plant."

The move comes following protests from villagers and activists who have cited over exploitation and pollution of groundwater and soil by the beverages major's bottling unit. In February last year, villagers from around Mehdiganj, about 25 kms from Varanasi, had asked the government to reject Coca-Cola's application for estimated $25-million expansion citing that it would further worsen the water conditions in the area. Coke's bottling plant in Mehdiganj, which was operational from 1999, has reportedly caused severe damage on the groundwater resources. India Resource Centre has led the campaign against Coca-Cola's expansion at Mehdiganj.

"We are delighted that the Indian government is doing what it is supposed to do - protect the common property resource of groundwater from rampant exploitation, particularly in water-stressed areas. This should serve as a notice to other companies that they cannot run roughshod over Indian rules and regulations and deny community rights over groundwater," said Amit Srivastava of India Resource Centre.

Meanwhile, Hindustan Coca-Cola Beverages, in its letter to Rajan, has stated that the company will explore options to relocate the new line within Uttar Pradesh after taking all regulatory approvals. "We will continue to operate our Returnable Glass Bottle line at the plant as we have been doing for the past 25 years," it added.

In June this year, the National Green Tribunal had given permission to Coca-Cola to resume operations at its bottling plant at Mehdiganj, giving a stay on the order of the Uttar Pradesh Pollution Control Board that directed the company to close the factory for various violations, including groundwater extraction.

But, the national Green Tribunal said that the stay will be effective if the company keeps its production up to 600 bottles per minute. The company will not be able to increase production capacity till it gets a clearance from the Central Ground Water Authority (CGWA). Otherwise, the stay will not be effective.

The Mehandiganj plant is a single-line facility and the only glass bottles unit of Hindustan Coca-Cola Beverages Pvt Ltd, the bottling arm of Coca-Cola. According to media reports, groundwater levels in Mehdiganj have dropped 7.9 meters (26 feet) in the 11 years since Coca-Cola started bottling operations there.

Coca-Cola has faced similar issues in the past as well. In March 2004, Coca-Cola had shut down a $16 million bottling plant in Kerala that reportedly had caused drastic decline in availability and quality of water. In April 2005, Kerala High Court had rejected water use claims, pointing out that wells in Kerala continued to dry up in summer, months after the local Coke bottling unit stopped operations.

FAIR USE NOTICE. This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. India Resource Center is making this article available in our efforts to advance the understanding of corporate accountability, human rights, labor rights, social and environmental justice issues. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.